NELFUND pilots tokenised payment system to prevent double school fees payments

The Nigerian Education Loan Fund (NELFUND) has commenced a pilot of a tokenised payment system designed to prevent students from paying their school fees twice and reduce complications associated with refunds, with nearly 400,000 loan applications received under the ongoing process.

NELFUND Managing Director, Akintunde Sawyerr, disclosed this on Wednesday during a press briefing, explaining that the proposed system would allow students to initiate payments directly to their institutions using tokens linked to their respective schools.

Under the arrangement, beneficiaries would receive notifications when their approved institutional charges are ready for payment and authorise the transactions through an application on their mobile phones.

Rather than transferring the approved fees into students’ personal bank accounts, the system would direct the funds to the designated institutions, with restrictions preventing beneficiaries from redirecting the money elsewhere.

Sawyerr said the initiative was developed to address cases in which students paid their fees without knowing that NELFUND had already transferred the money to their institutions, resulting in duplicate payments and subsequent refund requests.

“We discovered that there were some issues with students being informed in good time that their payments had been made by NELFUND, which meant that some of them would pay because they hadn’t realised that NELFUND had paid already,” he said.

He explained that the problem could occur when the fund settled a student’s institutional charges but the beneficiary, unaware of the transaction, independently paid the same fees to meet an institution’s deadline.

System to Give Students Control Over Payments

Sawyerr illustrated the challenge with an example of a situation in which NELFUND paid an institution on Monday, but a student who had not received notification proceeded to pay the same fees by Wednesday. The student only discovered on Friday that the fund had already completed the payment.

He said such incidents were genuine errors rather than deliberate attempts to obtain duplicate payments.

“It was a genuine error, no suspicion, no accusation, just genuine error,” the managing director said.

According to him, the proposed tokenised system would reduce the likelihood of such occurrences by allowing students to initiate payments themselves while ensuring that the funds could only be used for their approved institutional charges.

“We want to eliminate that need for refunds. So we’re placing the power of payment in the hands of the students,” Sawyerr said.

He explained that beneficiaries would be notified when their approved fees were available for payment and could then authorise the transaction through their phones.

Once authorised, the money would be transferred directly to the designated institution, reducing the risk of students independently paying fees that NELFUND had already covered.

Sawyerr stressed that the arrangement was not a cash-disbursement system but a mechanism designed to give students control over the initiation of payments while restricting the destination of the funds.

“We’re not giving the students money, but we’re giving them power,” he said.

The system is also designed to prevent students from transferring the approved funds into their personal bank accounts or redirecting them to institutions other than those for which the payments were authorised.

Token Linked to Specific Institution

Responding to questions from journalists about whether beneficiaries could transfer the funds to personal accounts after receiving them in a digital wallet, Sawyerr said the tokenised arrangement would restrict each payment to the institution for which it had been approved.

“The system, the token, not only can they not transfer it to their personal account, they can’t transfer it to any other school,” he said.

He explained that a student with an approved institutional payment of N200,000, for instance, would only be able to authorise the transfer to the designated school’s account.

“If they don’t push the button, the money doesn’t go anywhere. It will never be able to be transferred to the personal account of the student or anybody else,” Sawyerr said.

NELFUND Executive Director, Mustapha Iyal, further clarified that the token would be linked to a specific institution rather than a personal or mobile money wallet.

“It’s not a personal wallet, it’s not a mobile money wallet at all,” Iyal said.

He explained that each token would be attached to a particular institution and could only be used to direct payments to that school.

Iyal confirmed that the pilot phase had commenced, disclosing that the fund had received close to 400,000 applications at the time of the briefing.

“As I speak to you, we already have close to 400,000 applications,” he said.

He reiterated that the institution-linked arrangement was intended to ensure that approved funds could not be diverted to students’ personal accounts or redirected to other schools.

However, the officials did not establish that all the applications received had been processed through the pilot system. The figure therefore represents the applications disclosed during the briefing and should not be interpreted as the number of transactions completed under the new arrangement.

How the System Fits Into NELFUND’s Loan Scheme

NELFUND administers the Federal Government’s student loan scheme established under the Students Loans (Access to Higher Education) Act, 2024. The programme provides eligible Nigerian students with access to interest-free loans to cover institutional charges and, where requested and approved, upkeep expenses.

Under the existing arrangement described by the fund, approved institutional charges are paid directly to students’ institutions, while approved upkeep allowances are paid into beneficiaries’ bank accounts.

The proposed tokenised payment system concerns institutional charges and does not, based on the explanation provided during the briefing, replace the ordinary process for paying approved upkeep allowances to students.

The distinction is significant because the initiative focuses on improving the authorisation and tracking of school fee payments rather than changing the overall purpose of the student loan scheme.

The loan programme is intended to ease the financial burden of tertiary education and improve access for students who might otherwise struggle to meet the cost of their studies.

Its administration requires coordination among NELFUND, beneficiaries and tertiary institutions to ensure that applications are verified, approved amounts are accurate and payments are properly recorded.

Where students pay their fees before NELFUND’s disbursement reaches their institutions, refunds may become necessary after the institutions receive the loan payments. Delays in communicating completed transactions can therefore create additional administrative work for beneficiaries and institutions.

Sawyerr’s explanation suggests that the new arrangement is intended to address this communication gap by giving students a direct role in authorising institutional payments and reducing uncertainty about whether their fees have been settled.

Full Implementation Date Yet to Be Announced

Although NELFUND confirmed that the tokenised payment system had entered its pilot phase, the officials did not announce a specific date for its full implementation during the briefing.

The effectiveness of the system will depend on how smoothly the fund, students and participating institutions coordinate payment authorisation, transaction confirmation and record-keeping.

Clear communication will remain important, particularly where institutions impose deadlines for fee payments and registration. Students will need reliable information about the status of their approved loans and the steps required to authorise payments to avoid unnecessary delays.

Institutions will also need to maintain accurate records of payments received to minimise discrepancies between their accounts and NELFUND’s disbursement records.

If implemented effectively, the proposed system could reduce duplicate school fee payments and the administrative burden associated with refunds. Its actual impact, however, will depend on the outcome of the pilot and the arrangements put in place for wider adoption.

NELFUND has yet to provide a timeline for nationwide implementation or disclose how the pilot’s performance will be assessed before the system is expanded.

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